BIR Ruling

January 19, 1967 Sycip, Gorres, Velayo & Co. Certified Public Accountants 6760 Ayala Avenue Makati, Rizal Gentlemen : This refers to your letter dated July 1, 1996 stated as follows: cdta "Our said client is contemplating to engage in the production of hand-woven rugs and carpets. The materials and supplies to be used in the manufacturing process consist of woolen yarn, chemicals and dyestuff will all be imported, and all other raw materials to be used will be purchased locally. "Under the foregoing facts we believe the finished rugs and carpets to be manufactured by our client out of the said materials shall be subject only to 7% manufacturer's sales tax imposed by Section 186 of the Tax Code and that such finished rugs and carpets cannot be considered textiles within the purview of Section 185(p) of the said Code." In reply, I have the honor to inform you that carpets and rugs are not enumerated under Section 185 of the Tax Code. Such being the case, the rugs and carpets to be manufactured by your client may be considered ordinary articles subject to only 7% sales tax pursuant to Section 186 of the same Code. cdti Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue